Xstrata set to win Sphere

Xstrata is poised to win control of iron ore explorer
Sphere Minerals
after another large institutional shareholder signalled it would accept the mining giant’s $3-a-share cash offer.

UK-based Genesis Investment Management yesterday advised its custodian to tender its 7.98 per cent stake in Sphere into an institutional acceptance facility established by Xstrata.

Once included in calculations, the Genesis stake is expected to lift Xstrata’s relevant interest in Sphere above 50 per cent, satisfying the final condition on its bid.

An Xstrata spokesman said the company expecting to pass through the threshold today. The offer is due to close at the close of business tomorrow.

Yesterday Xstrata’s rival, Sin-Tang Development, received approval from the Foreign Investment Review Board to acquire up to 19.9 per cent of Sphere and a further 3 per cent subject to creep provisions.

Sin-Tang, which owns 13.5 per cent of Sphere, put an alternative proposal to the company last week but it was rejected by the board as uncertain and too conditional.

The proposal involved the provision of debt and equity funding for Sphere’s Askaf project, the smallest of its three projects in Mauritania.

Yesterday, Perth broker Euroz Securities, which has acted for Sphere in the past, advised shareholders to accept the Xstrata bid even though it was below its $4 valuation.